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More Time for Input on Mainland China’s Non-Market Economy Status

12 May 2017

Mainland China’s protocol of accession to the WTO allowed WTO members to use calculations in AD duty proceedings that are not based on the actual costs of mainland Chinese producers if the producers cannot demonstrate that market economy conditions prevail in their industry. The United States has used this provision to automatically assign NME status to goods imported from mainland China, which typically results in higher AD duties than would otherwise be the case.

When this provision expired on 11 December 2016, Beijing asserted that WTO members would have to stop using NME-type methodologies altogether with respect to mainland Chinese goods as of that date. The United States and others, however, believe they may continue to use such methodologies as long as the petitioners clearly show that market economy conditions do not prevail in the industry at issue.

The International Trade Administration is therefore conducting, as part of a new AD duty investigation of aluminium foil from the mainland, an inquiry into whether it should continue to treat mainland China as an NME. The ITA has extended from 3 May to 10 May the deadline for interested parties to submit comments and information on the following factors the agency is statutorily required to consider in making a market/non-market economy determination.

the degree of convertibility of the Chinese yuan

the degree to which wage rates in mainland China are determined by free bargaining between labour and management

the extent to which mainland China permits joint ventures or other investments by foreign firms

the extent of government ownership or control over the means of production

the extent of government control over the allocation of resources as well as price and output decisions of producers

any other factors the DOC considers appropriate

A final determination is expected before the ITA’s preliminary dumping determination in the aluminium foil case.